Tanzania to invest US$300 million in rural electrification until 2017

Monday, 06 January 2014 09:03

Most of the national grid is currently supplied by hydropower but outages and high cost of power continue to hamper business in Tanzania. (Image source: Jeremiah Castro/sxc.hu)With only seven per cent of the rural population having access to power supply, Tanzania will spend US$300mn in the next three years for rural electrification programme

According to the Rural Energy Agency (REA), this rollout is expected to boost access to over 30 per cent in an effort that will see 13 districts and 1,600 villages get access to electricity.

With an installed capacity of 773MW, Tanzania is the least electrified nation in East Africa with over 7.2mn household off-grid, according to World Bank.

Most of the national grid is currently supplied by hydropower but outages and high cost of power continue to hamper business in the country.

REA has recently signed agreements to implement second phase plan to supply electricity to 14 regions out of 24 earmarked for the power supply.

Ami Mpungwe, head of REA, said, “This move is aimed at ensuring that 30 per cent of the Tanzanian population access electric power by the year 2015.”

The single-phase connection for homes less than 30 metres, where poles will not be required, is expected to cost US$110 down from previous cost of US$284.

However, Mpungwe said that lack of contractors has affected plans to connect the remaining 10 regions such as Kagera, Mbeya, Geita, Kigoma, Lindi, Manyara, Morogoro, Coast, Rukwa and Tanga.

According to REA’s blueprint, six new hydro plants will be harnessed on waterfalls namely Darakuta in Babati, Lingatunda in Songea, Luswisi in Ileje, Macheke in Ludewa, Mwago in Kasulu and Nole-Ihalula in Njombe.

When fully harnessed, the six power stations are expected to add 9.1MW to the national grid and cater for 27,600 households.

According to experts, for the country to provide enough power for industries, institutions and households, it must generate at least 3,000MW of power.

This gap between demand and supply has enticed foreign investment in the energy sector in Tanzania as growth in population and the economy continues.

Investors have been targeting renewable and non-renewable to narrow the demand gap.Recently, US firm GE signed a co-operative agreement with Symbion Power Tanzania for the development of a US$1bn, a 400MW gas power to be built in Mtwara, located in the southern part of the country.

Symbion Power Tanzania currently runs a 55MW diesel engine plant in Dodoma, located in the north of the country.

A transmission line to Songea, situated close to the Malawi border, will also be constructed to deliver power to the region, which has huge economic potential with industries such as uranium extraction and other mining activities.

John Rice, vice-chairman of GE, said, “This project will ensure an enabling environment that supports sustainable economic growth by overcoming challenges such as power interruptions.”

While Tanzania has at least 1.18 trillion cubic metres of recoverable natural gas, little has been done to extract it.

According to the Ministry of Energy and Mineral, the country has an installed electricity capacity of 1,438MW. Of this capacity, 35 per cent comes from natural gas powered stations, with the rest coming from hydroelectric dams and diesel powered plants.

At the same time, Korean East-West Power Company and Tanzania Kibo Mining have invested US$700mn in the development of Rukwa Coal Power Project expected to generate 300MW to 350MW of power upon completion in four years.Louis Coetzee, CEO of Kibo Mining, said, “We target to have power in the national grid within 42-48 months after the formal signing of the agreement with the Korean East-West Power.”

Energy officials say that the country now has coal reserves of up to five billion tonnes, revised up from the previous figure of 1.5bn tonnes.Meanwhile, some of the ongoing power projects are the 200MW Kiwira Coal Plant that is expected to become operational in 2014 and would help boost power production in the country.

Another is the 2,100MW Stienglers Gorge hydroelectric power project located on River Rufiji Basin. It is expected to be operational by 2017.

The estimated capital cost of the project is US$2bn and at a tariff cost of US6.5c/KW, the project would make a profit in 12 years.